HSBC HOLDINGS(00005)2024-02-21 04:00Financial Performance - HSBC Holdings reported a record profit of 13.3 billion compared to the previous year, driven by revenue growth and strategic transactions[4]. - Total revenue increased by 66.1 billion, representing a 30% growth, with net interest income rising by 30,348 million, a significant increase from 22,432 million, up from 24,559 million for 2023, compared to 29,542 million, a significant recovery from a loss of 1.15 in 2023, compared to 0.31 per share, totaling 2 billion[4]. - The dividend payout ratio for 2023 is 50%, up from 44% in 2022, reflecting a commitment to returning value to shareholders[15]. - Total dividends paid to shareholders increased to 6,544 million in 2022, representing a growth of 77.5%[85]. - The total dividend per share for 2023 was 0.27 in 2022, marking a 96.3% increase[85]. Customer and Loan Growth - Customer loans increased by 41 billion, mainly driven by growth in wealth management and personal banking in Asia[4]. - Customer loans (net) amounted to 923,561 million in 2022, indicating stable loan growth[15]. - The total customer accounts reached 1,570,303 million in 2022, an increase of 2.6%[32]. - The company anticipates mid-single-digit percentage growth in customer loans year-over-year in the medium to long term, despite cautious outlook for the first half of 2024[10]. Operating Efficiency - Operating expenses decreased by 32.1 billion, a 2% reduction, primarily due to the end of a cost-saving program[4]. - The cost-to-income ratio improved to 48.5% in 2023, down from 64.6% in 2022, showcasing better operational efficiency[15]. - The total operating expenses for 2023 were 32,701 million in 2022[52]. Credit Losses and Provisions - Expected credit losses decreased by 3.4 billion, representing 33 basis points of average loans, influenced by economic uncertainties and inflation pressures[4]. - Expected credit loss provisions are projected to average about 40 basis points of total loans for 2024, with a return to normal levels of 30 to 40 basis points in the medium to long term[10]. - Expected credit losses and other credit impairment charges totaled 3,630 million in the previous year, reflecting a decrease of about 5.0%[50]. Strategic Initiatives and Acquisitions - HSBC completed the acquisition of Silicon Valley Bank UK, contributing an estimated $1.6 billion to pre-tax profit[4]. - The company plans to continue expanding its market presence and investing in new technologies to enhance customer service and operational efficiency[4]. - Following the sale of its French retail banking business, the company is focusing on investing in business development, including the acquisition of Citigroup's retail wealth management business in mainland China[62]. Market Outlook and Economic Conditions - The company anticipates challenges in the market environment, particularly due to conflicts in Europe and the Middle East, which may lead to economic volatility[66]. - The economic outlook for 2024 remains cautiously optimistic, with expectations of a slowdown in growth during the first half, followed by a recovery[76]. - HSBC's financial performance improved in 2023, with enhanced shareholder returns reflecting the collective efforts of all employees[76]. Legal and Regulatory Matters - HSBC is involved in multiple ongoing legal cases related to alleged anti-competitive behavior in foreign exchange and precious metals markets, with potential damages in Canada amounting to CAD 1 billion plus CAD 250 million in punitive damages[97]. - Ongoing investigations by global tax authorities may lead to substantial financial impacts for HSBC, although specific outcomes are currently unpredictable[98]. - HSBC is facing a collective lawsuit in Canada regarding price manipulation of silver and gold, with claims totaling CAD 1 billion[97]. Risk Management and Governance - The Group Risk Management Committee oversees internal controls and risk management systems, excluding financial reporting controls[141]. - HSBC has complied with the corporate governance codes in both the UK and Hong Kong throughout 2023[141]. - The establishment of the Technology Committee will lead to the formal dissolution of the Technology Governance Working Group on March 1, 2024[141].